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You get what you pay for, argue agents

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Guest | 09 Dec 2013, 09:01 AM Agree 0

Sellers are increasingly frustrated by the unwillingness of realtors to negotiate on commission rates, and they are not shy about naming those who do not play ball.
With more competition in the market place, including online players, and some agents offering deep discounted services, more sellers believe they should not have to pay a high price for an agent's work.
However, agents are fighting back. They say it's time to forget about the commission and concentrate on the sales price.
“I do not think that agents are being unrealistic with their rates, especially if people understood what is involved in the selling process and the work that goes into getting the highest price for that property,” argues Alex Prasoulis, owner of iListRealEstate Brokerage.
With some providers offering rates of two per cent or less, sellers are fighting their corner for greater discounts.“I can see why some people believe they are being charged too much when they see the rates offered by others,” says Tarik Gidamy, broker of record at TheRedPin. “It’s like anything in life, you get what you pay for. My advice would be not to go for the highest or lowest rate, go for the middle ground.”
Prasoulis advises sellers to become more proactive when discussing the rate with agents, such as asking for a breakdown on expenditure on marketing.
  • mike1234 | 11 Dec 2013, 02:06 AM Agree 0
    Markets need to be free in order to achieve the best efficiency. If realtor MLS was open to more people, more people would be able to do their OWN due diligence, and save the realtor time, essentially driving down the commission.

    At 5% commission between the two agents, even after taxes (which we all pay), expenses ( all tax deductible), and brokerage fees, Realtors make a good amount of money, if they are worth anything.

    My customers force me to throw in all sorts of chargeable items when times get tough. The alternative if I don't? they use the competition, because the competition is hungrier. Free markets create efficiency, and use peoples resources in the most effective manner.

    Realtors, quit advertising in news papers, and come up with a better value proposition. Find ways to achieve the same results, in a cost effective manner. Roll those savings through to us, so that we can save up for more rental properties, and use your services again. both the listing agent and buyers agent should be working together to offer lower fees.
  • Michael Englund | 11 Dec 2013, 09:24 AM Agree 0
    The commission debate will continue until the end of time. Consumers are free to choose who ever they like to represent them and/or they may even represent themselves. If a real estate salesperson can not give a prospective client enough reasons to make them feel comfortable that he or she is the right person for the job, then they simply don't deserve the commission. This argument will hold true in any industry where consumers are free to choose what salesperson they want to give their business to, so rather than complaining about low commissions, start earning higher commissions. I hear many agents saying "If they only knew how much work goes into selling a house..." It is our job to convey what a big job and responsibility it is. I know it's not easy, but that is what separates the best from the rest.
  • Denis | 11 Dec 2013, 01:32 PM Agree 0
    it's not surprising that home owners are frustrated about the costs.....It's hard to accept when you do just a bit of math.
    Consider an $ 800,000.00 house sale at a 5% rate.....that's a $ 40,000,00 commission.
    If you consider just the selling agent's commission ( without even considering the selling brokerage's share ).......it's $ 10,000.00.
    A person earning $ 50.00 / hr. would have to work 200 hours to earn that much......that's 5 weeks working every hour on just that.
    So, it's easy for a homeowner to to feel that the costs don't equate with the time spent on the job.

    In fairness to the agents, I know that there are costs incurred for the listings, marketing and their association fees.......and someone would have to pay me well to have to work the crazy hours they are expected to work.......but it just doesn't add up to enough to make the math seems reasonable.

    In the end, I suspect that agents will have to adjust their prices / offerings as homeowner's sentiments are turning against the existing price structures........and they will keep looking for alternatives at lower prices.
  • Denis | 11 Dec 2013, 01:34 PM Agree 0
    it's not surprising that home owners are frustrated about the costs.....It's hard to accept when you do just a bit of math.
    Consider an $ 800,000.00 house sale at a 5% rate.....that's a $ 40,000,00 commission.
    If you consider just the selling agent's commission ( without even considering the selling brokerage's share ).......it's $ 10,000.00.
    A person earning $ 50.00 / hr. would have to work 200 hours to earn that much......that's 5 weeks working every hour on just that.
    So, it's easy for a homeowner to to feel that the costs don't equate with the time spent on the job.

    In fairness to the agents, I know that there are costs incurred for the listings, marketing and their association fees.......and someone would have to pay me well to have to work the crazy hours they are expected to work.......but it just doesn't add up to enough to make the math seems reasonable.

    In the end, I suspect that agents will have to adjust their prices / offerings as homeowner's sentiments are turning against the existing price structures........and they will keep looking for alternatives at lower prices.
  • John Carr | 11 Dec 2013, 02:07 PM Agree 0
    So long as real estate fees run in the thousands of dollars, there will be those who feel they are paying too much and that fees are too high. Today sellers have ample choices to pay lower fees for real estate services.

    They range all the way from 'For sale by owner' to discounts real estate brokers offering a menu of services. What no seller can ever hope to get though is a 'Lexus' service at a 'Hyundai' rate.

    If a seller wants to pay a lower fee, the best strategy is to first select the best possible agent for the sale of their home. Then negotiate the best possible fee. If that agent is not willing to reduce her commission, the seller still has a host of other options.
  • Luiz Lameiras | 11 Dec 2013, 05:16 PM Agree 0
    Dear Mike,

    When last did you discounted your salary and worked for less in appreciation to your employer for taking all the risks in provide you with a job? or that he could sell is product/goods to us at a cheaper price?

    Please get yourself licensed and work in this industry for two years then your well qualified to comment about the high 2.5%
  • Robert Ede | 11 Dec 2013, 05:30 PM Agree 0
    "High" is relative. It's a judgement AND a calculation.
    The only valid evaluation of whether a "high" commission is justified is after comparing the Seller's net (buyer's 'all in' acquisition+ improvement costs vis a vis the "dream-come-true" buyer's objective) to what you'd get using another method.

    Point 2
    It's a performance-based commission, with the successful performance adjudged by the client. ie no performance -zero fees
  • russ | 11 Dec 2013, 08:44 PM Agree 0
    Common sense can explain it. I have been an agent since 1992 and for 10 years I was an agent in Alberta selling homes on average for $110,000 and condo's for $50-70000 range and many realtors offered 6% or even 5.5% of the 1st 100,000 and 3% of the balance which I thought was fair and we all seemed to make a decent living at it. There were agents charging 7% and 3% of the balance and actually producing letters to their sellers at listing presentations from there brokers stating they are not allowed to list for anything less.Then I moved to the west coast where the structure of commissions were very similar but the price of the property was more than double in value. So if I sold a home for 100,000 in Alberta I made about $3000.00 as one agent. That same type of home on the west coast was 250,000 so I made $5250.00. Now as we all know prices has doubled and even tripled in some areas since then and instead of 250,000 that house is worth 500,000 so now I would make $9000.00. Ok yes our expenses have gone up but come on you people maybe $1000-$3000 a year maximum since 10 years ago. I do discount now and I did back in Alberta too. The interesting thing is when I don't discount and when I do discount I offer exactly the same type of service and do the same work so this thing about you get what you pay is an argument for the people who are desperately trying to convince the public they are worth more then the next person and I also believe they are trying to convince themselves. This get what you pay for argument would be accurate for a "Mere" listing which is a totally different structure. The agents out East who charge 5% for the whole price must be smiling all the way to the bank. It is also interesting how many agents put the Fear factor into sellers when discussing agents who charge less for their services. Oh yes but you know why it is called common sense? Because it is not too common.
  • Jenni Bast | 11 Dec 2013, 10:52 PM Agree 0
    If I can't stay firm on my commission with my sellers, how firm will stay when negotiating a sale price with another agent or buyer?

    Just a question to all you who think we should lower our commission, (with the liability and risk we take up front), do you ask your sellers to take less pay at their jobs that they do only 40 hours a week at?

    I completely agree with Michael E. It is our jobs as Agents to be accessible 24/7 and take on all the stress for our clients, so that they have to handle very little to none and get to enjoy the happiness of a new home or making profit on their existing home. It is value for your money. Why do people drive Lexus's over little Sprint Cars....because they want more value...they believe paying more will get them more in the end (in which I completely agree).

    If I give one of my client's a discount on commission and not the others, how fair would that be to my other clients, when I do the same amount of work marketing, negotiating and selling the property? I would not be a very loyal salesperson.

    The agents that consistently have to create "cash-back bonuses for their clients" or "reducing their commissions" have not and will not last long in their market. I would like to thank these people for being in our industry because it challenges me to be better at my job every day!
  • Mike1234 | 12 Dec 2013, 01:24 AM Agree 0
    Dear luiz

    Licenced in what? Real estate? People don't need to be Licenced in real estate to understand business and profits.

    I am my own employer ( just like you are yours, as all realtors are "self employed" ) , and because I work in a "free market" and don't hide behind MLS I am forced to compete very hard. My operating margins shrink and expand all the time based on the economy, as does my volume and sales/revenue. Those are the choices I have to make. I would rather shrink my asking price and make less margin then make no margin at all.

    There all other alternatives to realtors, and if the competition bureau opens up MLS to the rest of us.... you will either have to innovate your 20 year old business model and learn to make the same " net margin" on a lower commission, or leave the industry because your customer pool will shrink.
  • Barbara DeAngelis | 12 Dec 2013, 11:14 AM Agree 0
    Just because I can read about how to do something, does not mean I can actually do it, complete it, or do it well. My husband is a civil engineer running his own company, and although he can install dimmer switches, he would never do the electrical wiring in his own house! Sellers now have the option in Ontario to pay agents on an hourly basis, instead of commission.
  • John Carr | 12 Dec 2013, 01:02 PM Agree 0
    Do not mean to sound harsh or uncaring. The long and the short of the commission argument can be easily summarized like this.

    If you do not believe you can get the value you are being asked to pay from a REALTOR, please go ahead and try to sell the home on your own.

    If that fails perhaps you'll have a better understanding of the value of a 'good' agent and of the MLS system.
  • Bryan Frazer | 12 Dec 2013, 02:55 PM Agree 0
    Oh please, agents do what? fill in a name, a few numbers on a document. take some pictures, buy sone donuts, print a couple of docs and get 1-3% of sale cost. The effort in all my sales and purchases have been minimal for the agent. Now with on line viewing what do they di fir the high cost? Why a percentage when the work involved in a 300k house is the same for a 3mil house. The subjects to, writing down what the person wants! The lawyers do the same for much much less.
    With Real estate agencies that regulate things it is not a competitive democratic business.
  • John Carr | 12 Dec 2013, 06:48 PM Agree 0
    Some of the best clients we have had are lawyers. Why in heaven's name would a person infinitely qualified to sell her home, pay a Realtor fee? I am not going to go on about.

    The only thing I can say is this ...lawyers know and understand the value of having an agent. If that's not the case, then lawyers like to overpay for services which they are able to do themselves!
  • Sandra L. Fox | 13 Dec 2013, 10:22 AM Agree 0
    Would the sellers looking for discounted conditions, go the the gas station and the advertising agencies and negotiate a discount for these two costly necessities, I have been selling since 1978 and rates were 6%, 7% most rural and 10% on recreation so we have come down a lot and everything else including house prices, have went up. it all equals out. Safety is the one big item realtors can provide, we or we should qualify
    people to see if they can afford, and if they are serious, sellers
    handling their own sales, do not do any checking in fact people come to the door and they let them in. I know one family selling privately came back for a second showing, ladies went in to house for a second long look and the men stole out of the garage cause seller let them in the garage by themselves.
  • DEK | 13 Dec 2013, 03:04 PM Agree 0
    Short and sweet, There are challanges with some deals and they could be long and frustrating before you get to the closing.
    You do have to handle some people with skilled
    patience and control.
    Also some deals end up with big problems that get quite messy, the sale not going through if the owner tried it themselves/or get sued.
    Really Sellers, think about it, the Buyer is the one who is actually paying the commission ??? (comparative value, your house is worth this much plus our remuneration.).
  • Russ | 14 Dec 2013, 07:08 AM Agree 0
    I am not sure why Realtors continue to make these false statements / insinuations that if you pay more for commissions that you will get better service. I guess I should change my fee to 8% then according to some of you I will give better service. I changed my fee structure for the most part because when home prices rose significantly in the last 10 years my conscious and my heart couldn't justify selling a home and making $9000.00 commission instead of the 3000-4000 commission I use to when prices were lower so I ended up somewhere in the middle and give the same good service regardless of the fee charged. I sat down and after a consultation I adopted a business model that was Fair to me and any customer.
  • 7 Realtor | 15 Dec 2013, 04:33 PM Agree 0
    When lawyers are very good, they charge higher and you are fine with that!
    When accountants are very good, they charge higher and you are still fine with that!
    When trades are very good, they charge higher and you pay!
    When doctors are very good, they can charge higher and you don't mind.
    When all of you perform your work better than your coworkers, you demand a raise from the boss

    WHY IS IT THAT...
    When realtors are very good, they should charge LESS than everyone else and NOT ask to charge?

    What if your doctor offered a $149 solution to do it yourself healing. Would you take it?
    What if your lawyer offered a $149 package to represent yourself in court. Would you take it?
    What if your trade gave you the DIY guide to complete your electrical, plumbing, heating and roof. Would you take it?

    Then why is it that Buyers and Sellers think that they have the tools, the systems, the skill set as well as the experience to buy and sell a property on their own?

    And why would that expertise really require a realtor to LOWER their fees in order to compete with everyone else?
  • Joeydadude | 15 Dec 2013, 04:38 PM Agree 0
    Let's do the math here.
    Value of house 200,000. Commission 5%.
    Remember one agent does not get 5%.
    There is a four way split - Sellers Agent and Brokerage, Buyer's Agent and Brokerage.
    Listing broker pays for all overheads - marketing, vehicle gas and maintenance, cell phone, signs, time etc. Buyer's agent also has considerable overheads, time spent on client which may or may not materialize.

    OVERALL WHO MAKES THE MOST FOR DOING NOTHING?
    All four parties spend a considerable amount of time filing quarterly tax returns for H.S.T.
    The taxman collects from four parties. After all the deductions are made the real agents actually don't make much. Just do the math.
  • Sylvia Rushmere | 13 Jan 2014, 02:04 PM Agree 0
    What will you be paying for your funeral??? Over $6,000. What benefit do you get for that except a hole in the ground. From our commission Realtors pay these fees: CREA, RECO, OREA, WECAR, BROKERAGE FEES, CP, E&O, AND INS. This does not include the advertising, open houses, expense of travel, paper work, calls, setting appointments. Shall I go on??? We work hard just like any other professional.
  • AB | 21 Jan 2014, 05:34 PM Agree 0
    It's not a mandatory service. I will even admit it's a luxury service if you go will a full service Realtor. You don't have to get a massage either - it's up to you when you call and make the appointment. You can also cut your own hair and change your own oil if you feel confident enough to take on the task.

    Who is anyone to pretend you know what a job entails unless you have done it yourself? Don't want to pay? No problem! Don't hire help. End of story. Don't understand the level of commitment to your clients to do this job well? Who cares. I don't know what a day in the life of a mechanic looks like but I expect the overhead plus the effort is worth the bill and I don't know what an alternator is so I need help.

    Until you have walked a mile in another man's shoes you have no idea what his walk is like. It's your money. Keep it.
  • AB | 21 Jan 2014, 05:42 PM Agree 0
    Open up the MLS... more? Wow. So in your world I should be able to not only drive my car onto a car lot and put up my own for sale sign but also have full access to all of the data this dealership has collected for decades regardless of the fact that I have made NO investment of my own time or money, no qualifications, i don't pay the property tax or help in any way with the marketing or membership costs. I just enjoy the set up, the professional presentation make by whoever set up the dealership, whatever it cost them to do that. Cause now it that someone has built it IT SHOULD BE MINE! That would really keep the world spinning.
  • Consumer | 25 Jan 2014, 11:26 PM Agree 0
    Don't even compare real estate agent to a lawyer or accountant. It takes a lot more brains, money, time and effort to get a real job.
    I don't care least for agents commission and their 'professionalism' - most of them are here to 'rip'.
    The one who makes it is the one who makes it, and that is that.

    And please - don't call this occupation a business.
    It's a sales job - if you are not shy and can market yourself to the point of 'no return' -you will make it and make good income from your 'job' ..... not business.

    Those agents who brag, drive rental cars to impress, wear suits, do extreme smiles, have same stories for every occasion, do rediculous youtube videos, have their say because they believe they are entitled for opinion just because they have licence.......use social network...........fake, fake, fake......don't want to mention anymore.....pure filth.... they are just a part of it that we have to deal with when we want to buy or sell....


    what really ticks me off is that MLS doesn't let public to sell privately on their site period.I would pay them $500 to list personal add and deal with the process.Lawers will deal with the paperwork.Whoever wants to use agent - use agent, but If I want to sell my house just like a car, or anything else - I should be able to do this on the comnon ground. This porofession is dead as 'dead' and once MLS listing is for private consumer - real estate agents are 'gone' as they should all be gone by now. We needed them 10 years ago when internet was new and slow.....seriously....I am so tired of this burocracy money grabbing set ups.....enough is enough.....using an agent should be right of choice and not obligation....and its very easy to solve.....people: sell privately !!! You will save $ ,

    And this is the root problem of all problems in this matter..
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